Performance Feedback And R&D Search

For the past few years,with the slowdown of China's economic growth,the readjustment of economic structure and the transformation of industry,the Chinese central government and many Chinese companies pay more and more attention to their innovation,especially the capability of independent innovation.One of the key points to develop innovative capability is to increase their R&D investments.The all-important premise for companies' R&D investments decision making is to assess their own ability and resource endowment.Also companies should pay attention to the ability and relative resource endowment of their competitors in the same industry.The assessment of companies usually depends on how feedback on companies'performance relative to aspiration level,which can affect a variety of strategic outcomes such as R&D search.Performance feedback and its influence on decision making outcomes is a very hot topic in the behavioral theory of the firm.A key argument in the behavioral literature is that companies' decision makers utilize an aspiration level to assess companies'performance,then affects companies' decision making,such as risk taking.The behavioral theory of the firm generally argues that performance feedback will affect companies' strategic behaviors.Concretely,when companies' actual performance negatively deviates from the companies' aspiration level(historical or social),companies usually conduct a problemistic search and increase risk taking,whereas when actual performance positively deviates from the companies' aspiration level(historical or social),companies usually decrease risk taking or maintain the status quo.Although these predictions have generally received lots of empirical support,recently many scholars have the different voice,not only of the theoretical explanation mechanism,but also of the empirical results.The continuing theoretical controversy and empirical inconclusiveness have resulted in a fragmented literature in this area,hindering the studies in this research stream and further progress.At the same time although studies in this research stream has been applied in numerous countries,mainly in the west,the universal model posited by the behavioral theory of the firm need the investigation of cross-country institutional and cultural context,especially in emerging economy such as China.Our research examines the relationship between performance feedback and R&D search,which based on the behavioral theory of the firm,agency theory and competitive dynamics theory in Chinese context.Besides,we consider CEO duality,CEO stock ownership,environmental dynamism,CSM and the ownership type of state-owned enterprises,as the very important moderators,which are from agency theory literature,companies' task environment literature and firm ownership literature.Our research sample comes from Chinese manufacturing industry because of abundant R&D investments in this industry,also because of the aim to comparative studies.Analysis of panel data from 2006 to 2012 on R&D search of Chinese manufacturing public listed firms based on fixed effect panel regression reveals findings largely consistent with our predictions.Firstly,the mian effect results of our empirical analysis indicate that both in the negative attainment discrepancy context and in the positive attainment discrepancy context,companies will increase their R&D search.Concretely,we find that in the negative attainment discrepancy context(performance below the aspiration level),companies will conduct a problemistic search and increase R&D search,which we call the mechanism problemistic-driven search.Whereas in the positive attainment discrepancy context(performance above the aspiration level),companies will conduct a slack search and increase R&D search,which we call the mechanism slack-driven search.Secondly,the moderating effect results of our empirical analysis indicate the support of most of our predictions.We find that CEO duality negatively moderates the relationship between negative performance feedback and R&D search but has no modarating effect on the relationship between positive performance feedback and R&D search.CEO stock ownership also negatively moderates the relationship between negative performance feedback and R&D search but has no modarating effect on the relationship between positive performance feedback and R&D search.From companies' task environment literature,we argue that environmental dynamism and CSM independently affect the relationship between performance feedback and R&D search.Concretely,we find environmental dynamism negatively moderates the relationship between negative performance feedback and R&D search whereas positively moderates the relationship between positive performance feedback and R&D search.CSM also negatively moderates the relationship between negative performance feedback and R&D search whereas positively moderates the relationship between positive performance feedback and R&D search.We inimitably consider the ownership type of state-owned enterprises as a modarator because of the particularity of state-owned enterprises.The results of our empirical analysis indicate that compared with other ownership-type enterprises,the state-owned enterprises will conduct less R&D investments both in the negative attainment discrepancy context and in the positive attainment discrepancy context.Our study makes three important contributions.First,we contribute to the relationship between performance feedback and R&D search.We vividly posit two explanatory mechanism:problemistic-driven search and slack-driven search,which can explain two kinds of performance attainment discrepancy and their effects on R&D search.Our theorizing and empirical findings confirm that both the two explanatory mechanism do matter.Besides,our research sample comes from Chinese manufacturing public listed firms,which greatly enriches our understanding about the breadth of studies in performance feedback stream applicability.Second,we contribute to the behavioral theory of the firm by extending prior work that has largely assumed context does not matter to the BTOF-driven effects of positive and negative attainment discrepancies.In our studies,we theorize and empirically examine the modarating effects of CEO duality,CEO stock ownership,environmental dynamism,CSM and the ownership type of state-owned enterprises.Our research indicates that the Chinese context really does matter.Third,our research of the modarating effect enriches the intergration between the behavioral theory of the firm and agency theory,also the intergation between the behavioral theory of the firm and competitive dynamics theory.We well made up for the literature gaps of the behavioral theory of the firm.Last but not least,our studies make several discussions and conclusions,also we briefly state important management implications.Besides,we point out several important limitations of our study and the future research directions.